Addus HomeCare Announces Fourth-Quarter 2018 Financial Results

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(amounts and shares in thousands, except per share data)

(Unaudited)

Income Statement Information:

For the Year Ended
December 31,

2018

2017^(A)

2018

2017^(B)

Net service revenues

$  139,803

$  112,028

$  518,119

$  425,994

Cost of service revenues

101,859

81,243

379,843

310,119

Gross profit

37,944

30,785

138,276

115,875

27.1%

27.5%

26.7%

27.2%

General and administrative expenses

28,938

19,662

105,025

76,902

(Gain) loss on sale of assets

38

38

(2,467)

Depreciation and amortization

1,967

1,853

8,642

6,663

Provision for doubtful accounts

58

2,202

272

8,409

Total operating expenses

31,001

23,315

113,977

89,507

Operating income from continuing operations

6,943

7,470

24,299

26,368

Interest expense

1,179

841

5,016

4,472

Interest income

(125)

(14)

(2,592)

(66)

Other income

-

-

(217)

Income from continuing operations

   before income taxes

5,889

6,695

21,875

22,179

Income tax expense from continuing operations

1,213

3,695

4,498

8,645

Net income from continuing operations

4,676

3,000

17,377

13,534

Income from discontinued operations, 
      net of tax

126

147

126

147

Earnings from discontinued operations

126

147

126

147

Net income

$       4,802

$      3,147

$    17,503

$    13,681

Net income per share:

   Continuing Operations

$        0.35

$        0.26

$        1.40

$        1.16

   Discontinued Operations

$        0.01

$        0.01

$        0.01

$        0.01

Weighted average number of common shares 
   outstanding – diluted

13,381

11,638

12,383

11,623

Cash Flow Information:

For the Three Months
Ended December 31,

For the Year Ended
December 31,

2018

2017

2018

2017

Net cash provided by operating activities

$      8,524

$    10,193

$    33,203

$    52,771

Net cash (used in) investing activities

(2,058)

(1,160)

(67,789)

(24,268)

Net cash (used in) provided by

   financing activities

(83,537)

(967)

51,238

17,238

Net change in cash

(77,071)

8,066

16,652

45,741

Cash at the beginning of the period

147,477

45,688

53,754

8,013

Cash at the end of the period

$    70,406

$    53,754

$    70,406

$    53,754

^(A)  Includes revision to previously reported amounts to increase net service revenues by $70, increase provision for doubtful 
      accounts by $150 and increase income tax expense from continuing operations by $14.

^(B)    Includes revision to previously reported amounts to increase net service revenues by $279, increase provision for doubtful 
       accounts by $150 and increase income tax expense from continuing operations by $56.

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

December 31,

2018

2017^(A)

Assets

Current assets

Cash

$    70,406

$    53,754

Accounts receivable, net

108,000

92,888

Prepaid expenses and other current assets

7,098

8,379

Total current assets

185,504

155,021

Property and equipment, net

10,658

7,489

Other assets

Goodwill

135,442

90,339

Intangible assets, net

23,784

16,596

Deferred tax assets

-

1,601

Total other assets

159,226

108,536

Total assets

$  271,046

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$    12,238

$      6,736

Accrued expenses

49,204

44,596

Current portion of long-term debt, net of debt issuance costs

62

3,099

Total current liabilities

61,504

54,431

Long-term debt, less current portion, net of debt issuance costs

17,222

39,860

Deferred tax liabilities, net

494

-

Other long-term liabilities

635

446

Total long-term liabilities

18,351

40,306

Total liabilities

79,855

94,737

Total stockholders' equity

275,533

176,309

Total liabilities and stockholders' equity

$  355,388

$  271,046

^(A) Includes revision to previously reported amounts to increase accounts receivable, net by $3,936, increase accounts payable by 
     $2,465, decrease accrued expenses by $204 and increase other long term liabilities by $446.

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Net Service Revenues by Segment

(Amounts in thousands)

(Unaudited)

For the Three Months
Ended December 31,

For the Twelve Months

Ended December 31,

2018

2017

2018

2017

Personal Care

$  129,805

$  112,028

$  492,413

$  425,994

Hospice

7,085

-

18,850

-

Home Health

2,913

-

6,856

-

Total Revenue

$  139,803

$  112,028

$  518,119

$  425,994

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data

(Unaudited)

For the Three Months
Ended December 31,

For the Twelve Months

Ended December 31,

2018

2017

2018

2017

General

Adjusted EBITDA (in thousands) ⁽¹⁾

$     12,344

$     10,551

$     43,948

$     36,897

States served at period end

-

-

24

24

Locations at period end

-

-

156

116

Employees at period end

-

-

33,153

26,097

Personal Care

Average billable census - same store ⁽²⁾

33,992

34,730

34,056

35,343

Average billable census - acquisitions

3,575

-

3,541

-

Average billable census total ⁽²⁾

37,567

34,730

37,597

35,343

Billable hours (in thousands)

7,069

6,148

26,934

23,833

Average billable hours per census per month

62.1

59.0

59.3

56.2

Billable hours per business day

107,106

94,582

103,195

91,664

Revenues per billable hour

$       18.36

$       18.21

$       18.28

$       17.86

Hospice

Admissions

418

-

1,061

-

Average daily census

528

-

528

-

Average length of stay

120.7

-

136.2

-

Patient days

48,540

-

128,819

-

Revenue per patient day

$     145.97

$              -

$     146.33

$              -

Home Health

New Admissions

716

-

1,757

-

Recertifications

458

-

1,443

-

Total Volume

1,174

-

3,200

-

Visits

19,080

-

53,711

-

Percentage of Revenues by Payor:

Personal Care

State, local and other governmental programs

56.8%

62.4%

58.2%

64.2%

Managed care organizations

36.3

34.8

35.3

33.1

Private duty

4.0

2.2

4.1

2.1

Commercial

1.5

0.6

1.3

0.6

Other

1.4

-

1.1

-

Hospice

Medicare

93.5%

-%

93.6%

-%

Managed care organizations

4.6

-

5.6

-

Other

1.9

-

0.8

Home Health

Medicare

84.0%

-%

88.0%

-%

Managed care organizations

14.5

-

11.0

-

Other

1.5

-

1.0

-

⁽¹⁾   We define Adjusted EBITDA as net income before interest expense, taxes, depreciation, amortization, M&A expenses, stock-
       based compensation expense, restructure charges and severance and other costs. Adjusted EBITDA is a performance measure 
       used by management that is not calculated in accordance with generally accepted accounting principles in the United States 
       (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of 
       financial performance calculated in accordance with GAAP.

⁽²⁾   Exited sites would have reduced same store census for the three months ended December 31, 2017, by 0 and the twelve months 
       ended December 31, 2017 by 148.

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(amounts in thousands, except per share data)

(Unaudited)

For the Three Months
Ended December 31,

For the Twelve Months
Ended December 31,

2017

2018

2017

Reconciliation of Adjusted EBITDA to Net Income: ⁽¹⁾

Net income

$       4,802

$       3,147

$     17,503

$     13,681

Less: (Earnings) from discontinued operations,

    net of tax

(126)

(147)

(126)

(147)

Net income from continuing operations

4,676

3,000

17,377

13,534

Interest expense, net

828

827

4,451

3,083

Interest income from Illinois

-

-

(2,253)

-

Secondary offering costs

124

-

189

-

Write off debt issuance costs

226

-

226

1,323

Write down deferred tax asset/impact of Tax
  Reform Act

-

1,305

-

1,305

Loss on sale of assets

38

-

38

-

Gain on sale of joint ventures/adult day service
  centers

-

(402)

-

(2,467)

Other non-operating income

-

(52)

-

(217)

Income tax expense

1,213

2,390

4,498

7,340

Depreciation and amortization

1,967

1,853

8,642

6,663

M&A expenses

1,790

774

4,989

2,116

Stock-based compensation expense

1,148

734

4,109

2,552

Restructure charges

297

76

1,035

627

Severance and other costs

37

46

647

1,038

Adjusted EBITDA

$     12,344

$     10,551

$     43,948

$     36,897

Reconciliation of Adjusted Net Income to Net Income: ⁽²⁾

Net income

$       4,802

$       3,147

$     17,503

$     13,681

Earnings from discontinued operations, net of tax

(126)

(147)

(126)

(147)

Interest income from Illinois, net of tax

-

-

(1,790)

-

Write down deferred tax asset from Tax Reform
  Act per diluted share

-

1,554

-

1,554

Gain on sale of joint ventures/adult day service
  centers, net of tax

-

(276)

-

(1,532)

Write off debt issuance costs, net of tax

-

-

-

909

Other non-operating income, net of tax

-

(36)

-

(149)

M&A expenses, net of tax

1,415

533

3,954

1,455

Stock-based compensation expense, net of tax

903

504

3,256

1,754

Restructuring charges, net of tax

331

52

969

431

Severance and other costs, net of tax

29

32

512

713

Adjusted Net Income

$       7,354

$       5,363

$     24,278

$     18,669

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures (Continued)

(amounts in thousands, except per share data)

(Unaudited)

For the Three Months
Ended December 31,

For the Twelve Months
Ended December 31,

2018

2017

2018

2017

Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share: ⁽³⁾

Net income per diluted share

$           0.35

$           0.26

$           1.40

$           1.16

Interest income from Illinois per diluted share

-

-

(0.14)

-

Write down deferred tax asset from Tax Reform 
     Act per diluted share

-

0.12

-

0.12

Write off debt issuance costs per diluted share

-

-

-

0.09

Gain on sale of adult day service centers

    per diluted share

-

-

-

(0.12)

Gain on sale of joint venture divestiture

    per diluted share

-

(0.01)

-

(0.01)

M&A expenses per diluted share

0.11

0.04

0.32

0.12

Restructure charges per diluted share

0.02

-

0.08

0.03

Severance and other costs per diluted share

-

-

0.04

0.06

Stock-based compensation expense

    per diluted share

0.07

0.04

0.26

0.15

Adjusted Net Income Per Diluted Share

$           0.55

$           0.45

$           1.96

$           1.60

Reconciliation of Net Service Revenues to Adjusted Net Service Revenues: ⁽⁴⁾

Net service revenues

$    139,803

$    112,028

$    518,119

$    425,994

Revenues associated with the closure

    of certain sites

-

-

2

(1,339)

Adjusted Net Service Revenues

$    139,803

$    112,028

$    518,121

$    424,655

(1)    We define Adjusted EBITDA as earnings before interest expense, interest income, other non-operating income, taxes, depreciation, amortization, 
        M&A expenses, stock-based compensation expense, restructure expenses, severance and other costs and gain on the sale of ADS. Adjusted 
        EBITDA is a performance measure used by management that is not calculated in accordance with generally accepted accounting principles in 
        the United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of 
        financial performance calculated in accordance with GAAP.

(2)    We define Adjusted Net Income as net income before interest income from the state of Illinois, M&A expenses, stock-based compensation 
        expense, restructure expenses, severance and other costs and gain on the sale of ADS. Adjusted Net Income is a performance measure 
        used by management that is not calculated in accordance with generally accepted accounting principles in the United States (GAAP). It 
        should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance 
        calculated in accordance with GAAP.

(3)    We define Adjusted diluted earnings per share as earnings per share, adjusted for interest income from the State of Illinois, M&A expenses, stock 
        compensation expense and restructure expense, severance and other costs and gain on the sale of ADS.  Adjusted diluted earnings per share is 
        a performance measure used by management that is not calculated in accordance with generally accepted accounting principles in the United 
        States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial 
        performance calculated in accordance with GAAP.

(4)    We define Adjusted net service revenues as revenue adjusted for the closure of certain sites.  Adjusted net service revenues is a performance 
        measure used by management that is not calculated in accordance with generally accepted accounting principles in the United States (GAAP).  
        It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance 
        calculated in accordance with GAAP.